Buyer Behavior

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Date: 2014
Financial & Organizational Behavior
Publisher: Salem Press, Inc.
Series: Business Reference Guide
Document Type: Topic overview
Pages: 6
Content Level: (Level 5)

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Page 39

Buyer Behavior

Abstract

Buyer behavior is based on a complex process by which consumers choose, acquire, use, and dispose of goods and services in order to fulfill their needs and desires. To understand why a buyer makes a purchase, it is important to understand his/her needs and motivations. This knowledge enables the seller to better develop a strategy for convincing the potential buyer that the product or service will meet his/her needs. In addition, in order to better target one's marketing strategy, it is important to understand the buying situation, including the routineness with which the particular purchasing decision is made as well as the importance of the decision to the buyer. When the buyer is an organization, it is also important to recognize that although there may be one decision maker, there are typically many parties who can influence the final buying decision.

Overview

No matter how good the product or service, no matter how satisfied the employees, no matter how well the communications within an organization, if the customer does not buy what the business is selling, these factors are irrelevant. Although people may band together for all sorts of reasons — the need to feel a part of a group, the need to contribute to the welfare of society, the need to connect with friends — businesses are by definition commercial, industrial, or professional enterprises that seek to make profit. Even nonprofit organizations need to make money in order to continue to provide their service that they are offering to their market. The question, of course, is how is this best done?

Interest in understanding buyer behavior has been going on since there first were buyers and sellers. Philosophers have long wondered why consumers buy things. Aristotle, for example, wondered about consumption and its effects on both the individual and society. Eighteenth-century philosopher Adam Smith pondered the same and concluded that in the end, resources would be optimally allocated.

However, business organizations are interested in more than philosophical musings about buyer behavior: They need to know what makes a consumer purchase a product or service and how to reach the consumer and convince him/her to buy. Toward this end, the study of buyer behavior has become more systematic in the past few decades; applying insights from the social sciences in an attempt to help businesses better understand the consumers in the marketplace and determine ways to best reach them.

One of the areas of study that has been applied to the prediction of buyer behavior is motivation. There are several approaches to explaining this important determinant of human behavior. Instinct theories emphasize the innate biological impulses that motivate behavior (e.g., a bird flies south for the winter; a human automatically tries to protect his/her children). Drive-reduction theories are based on the assumption that behavior is a response to biological needs for the organism's physiological system to remain stable and that organisms learn to reduce the drives or motivating tendencies that arise from those needs (e.g., if thirsty, one looks for something to drink). Arousal theories posit that organisms are motivated to seek and maintain an optimal level of arousal in various physiological systems (e.g., a cat enjoys playing with a catnip mouse; a human enjoys the adrenaline rush of wind surfing). Incentive theories of motivation are based on the assumption that behavior is performed in response to the possibility of rewards or punishments (e.g., the dog learns to sit up to get a treat; the child learns to do homework assignments after school in order to watch TV in the evening).

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One of the most enduring and popular theories of motivation that has been applied to the understanding of buyer behavior is Abraham Maslow's hierarchy of needs. In this theory, Maslow hypothesizes that people are motivated by different things at different times in their lives depending on what needs have been met or not met. This theory also hypothesizes that needs lower on the hierarchy (such as physiological needs for food, shelter, and warmth) must be satisfied before higher-level needs (such as love and self-actualization) can be satisfied.

As shown in Figure 1 , the most basic level of needs is physiological needs. This category includes the needs to satisfy hunger and thirst, sleep, and sex. From a buyer behavior point of view, this means that a salesperson would most likely be unsuccessful in selling a new luxury car to someone who is living from paycheck to paycheck and is struggling to put food on the table: The need to eat is more important than the need to impress one's friends. Once the physiological level of needs has been met, people become more concerned with safety needs. These needs include the need to feel safe, secure, and stable in life (e.g., having a job so that one not only has food for today but can also buy food for the foreseeable future). At this level of need, people want to feel that their world is organized and predictable. From a buyer behavior point of view, this could mean that someone is unlikely to buy a house if s/he is working a temporary job with no future prospects. In this situation, there is no way to predict whether or not one will be able to continue to make mortgage payments. Once the security and safety needs of the individual are satisfied, the next level of needs is for belongingness. This level includes such factors as the need to feel accepted and part of a group, to love or feel affection and be loved in return, and to avoid loneliness and alienation. From a consumer behavior point of view, if someone is at the level of belongingness needs, s/he is less likely to invest in the purchase of a status item than if these needs have been met because of the lack of a group to affirm their status. The next level of needs in Maslow's hierarchy is the esteem needs. These include the needs to achieve and to be competent and independent. In addition, the needs at this level of the hierarchy include the needs for self-respect and to develop a sense of self-worth as well as the need for recognition and respect from others. From a buyer behavior point of view, someone at this level in the needs hierarchy would be likely to buy the aforementioned luxury item as a symbol of his/her status because the lower level needs have been met.

The final level on Maslow's hierarchy of needs is self-actualization. This is a complex concept that basically means the need to live up to one's full and unique potential. Associated with self-actualization are such concepts as wholeness, perfection, or completion; a divestiture of "things" in preference of simplicity, aliveness, goodness, and beauty; and a search for meaning in life. People at this level in the hierarchy would be less interested in the acquisition of things but would more likely be interested in acquiring things that enable them to reach other goals such as learning, spiritual development, or enjoying the wonders of nature.


Figure 1: Maslows Hierarchy of Needs

Figure 1: Maslow’s Hierarchy of Needs

One of the implications of Maslow's hierarchy of needs for understanding buyer behavior is that one has to approach selling the same thing in different ways depending on where the buyer is on the hierarchy. For example, one would be unlikely to sell a world cruise to someone who was at the physiological or safety levels of motivation. However, at the belongingness level of the hierarchy, the trip could be marketed as a group venture to be enjoyed with friends or fellow college alumni. At the esteem level, the trip could be marketed as a luxury item that will make one the envy of one's friends. Neither approach, however, would work well at the level of self-actualization. At this level, the trip would more successfully be sold as a way to broaden one's horizons, learn new things, or experience the beauty of foreign lands. The trip in all three cases could be the same. However, the way it is marketed would differ depending on the needs of the individual.

There are several other things that can be learned from Maslow's hierarchy of needs that have direct application to understanding buyer behavior. First, one can move not only up the hierarchy, but down as well. For example, although most adults are not worried about the safety and security needs (i.e., they have a regular paycheck and live in a safe neighborhood), the situation can change. Over time, a once safe neighborhood may start having a problem with crime. Therefore, someone who once felt secure at home in a quiet, middle-class neighborhood and felt no need for protection, might now feel less secure and would be interested in purchasing an alarm system. In addition to moving up and down the hierarchy, people can experience multiple needs at once. So, for example, the person in the gourmet store buying food for a dinner party may have several simultaneous motivators: hunger (e.g., if s/he has not eaten before going shopping or is on a diet that will be broken for the dinner party), esteem (e.g., the need to impress the people who are coming over to the party), or safety (e.g., the need to buy fresh, untainted food) might come into play.

From a marketing point of view, understanding the needs of the potential buyer can help focus the marketing effort to better dem- onstrate how the product or service will meet his/her particular needs. As discussed above, marketing to a potential buyer by targeting needs above where s/he currently is on the hierarchy (e.g., the luxury car to the unemployed person) is unlikely to meet with success. In addition, Maslow's hierarchy provides a method of identifying needs of classes of potential buyers so that successful marketing programs can be crafted to target these needs.

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Applications

Buying Situations

Although there are a number of models available for predicting consumer buying behavior, most theorists believe that buyers' behavior changes depending on the buying situation. This term is most frequently used to refer to factors that cannot be predicted from knowledge of either the buyer or the situation alone. For example, buying a widget as a present for someone else might entail an additional level of decision-making factors than if the widget were being purchased for oneself (e.g., I like the widget, but will my friend, who has different tastes, like it?). Similarly, the purchase of a dessert from a bakery might differ depending on whether it was being purchased for the family, a formal dinner party, or a child's birthday party. Although some decisions can be made spontaneously (e.g., I want chocolate cake for dessert), others cannot (e.g., I need to hire a new accountant). Therefore, people frequently use different problem-solving processes for the different types of situations.

Some models of buyer behavior theorize that consumers may change their behavior depending on the reason for the purchase. Any one of three levels of problem solving may apply to the purchasing decision depending on how routine or important the purchase is. At the lowest level is routine problem solving, used when the buyer knows the product well, needs little information, the price is low, or the risk from making a wrong buying decision is low. For example, when grocery shopping, I am most likely to grab a quart of skim milk and put it in my shopping cart without much thought: I know that I want skim milk and not whole milk; I have been quite happy with the store brand in the past and see no need to change; and the cost of a quart of milk is negligible compared to my total food budget. On the other hand, if the manufacturer of my favorite breakfast cereal discontinues that variety, I may have to employ limited problem solving to the situation. These skills are important when buying a new or unfamiliar brand or considering a more expensive item. For example, I may want to compare the fiber, sodium, sugar, and carbohydrate contents of the various cereals under consideration. I may prefer cereal that has both crunchy nuggets and flakes rather than either one alone. I will probably also compare prices to see which the better bargain is. Although I may not walk out of the grocery store ecstatic because of my decision to buy a new cereal, buying the wrong one will not be an earth-shattering event and the decision can be made in a matter of several minutes comparing labels while standing in the grocery store aisle. Other decisions, however, do require extensive problem-solving processes, particularly where the price is high, the item is rare, or the purchase requires a significant investment of time. For example, the decision to buy a new television set probably cannot be made in a few minutes' time in the aisle of a big-box store. This is not a minor purchase, and I need to consider a number of factors. Do I want a high-definition set or is a digital set sufficient? Are there size limitations for fitting the television into an existing space or for being able to see the screen from a distance? Is an investment in a plasma screen worth the cost at this time? The more information that is needed, the more complicated the decision making process becomes.

Similarly, buyer behavior can change depending on the type of buying situation. For example, a routine purchase such as buying another ream of copy paper or instructing one's accountant to prepare this year's tax return does not require much decision making on the part of the buyer or marketing on the part of the seller. The office supply sales person may just ask if I want to place the same order as last time or the accountant may ask if anything has changed since last year. Other than that, the decision has been made. Other buying situations, however, are more complicated. If the usual brand of copy paper is no longer available or if an equivalent brand goes on sale, the office supply salesperson will have to be more proactive in trying to get me to buy the product. If my former accountant retires and I hire a new one, we may need to sit down together and discuss the situation and the nature of my business before we mutually agree to proceed with the process. If this situation is exacerbated and if the purchase is for a product or service that I have not purchased before — a will, a new piece of office equipment — the seller will have to use considerably more skill than for the other two types of purchases.

Organizational Buying Behavior

It is not only individuals who are consumers: Businesses, too, purchase both goods and services. In a small business, this may be done by the founder of the organization. However, in many businesses, the sales transaction may involve the formal and informal inputs and many different parties. To successfully market to organizations, one must understand not only the individual behaviors of each of these parties, but their interactions as well in order to convince them to buy. This means that there is not a single best approach to selling to an organization. Sometimes, in fact, different selling approaches must be tailored to different departments or executives within a single organization.

One model that attempts to explain the complexity of this situation examines the roles of different parties in the decision-making process so that the seller's market strategy can be appropriately focused. As shown in Figure 2 , this model recognizes that the organizational buying process may include the inputs of several types of people: gatekeepers, users, buyers, influencers, decision makers, and sponsors and anti-sponsors.

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Figure 2: The Decision-Making Unit

Figure 2: The Decision-Making Unit (adapted from Tasso, p. 73)

The obvious person to target in a sales pitch is the decision maker. For major purchases, this is often a senior-level executive (e.g., the chief executive officer, chief financial officer, chief operating officer) or a person high up in the functional chain who has the final authority for deciding whether a product or service will be procured (e.g., the head of the department in which the product or service will be used). Decision makers at these levels tend to take a high-level view of the decision-making process rather than get mired down in the technical details. In addition, persons at these levels are typically influenced by various other parties within the organization who help shape the final decision. These parties may include gatekeepers, users, buyers, influenc-ers, and sponsors or anti-sponsors.

Gatekeepers are the people within the organization who control access to the decision makers. These may be people like administrative assistants, receptionists, or mid-level managers on the organization management or functional hierarchies. Although these individuals do not make the purchasing decisions, they can keep the prospective seller from reaching the people who do. Therefore, it is important to develop a rapport with the gatekeepers so that one will be granted access to the decision makers. In addition to gatekeepers, there are other people in the decision-making process who, although technically without power, are important players in the decision. These are the users; the actual people who will be using the product or service. For example, although the decision to replace the current printers, copiers, and scanners with multifunctional units that provide all three capabilities may be attractive to decision makers because they require less financial investment in equipment, the proposition may not be as attractive to the actual users. They may not want to give up the equipment with which they are familiar or know that if a multifunction machine breaks down, they will lose the equivalent capabilities of three of their current machines. Although these individuals may not have a direct say in the decision-making process, they may influence the purchase. On the other end of the spectrum are the buyers: those individuals who actually purchase the product or service but do not use it. Their goal is to maximize the benefit to the organization of the purchase by making sure that it meets technical standards and is done at an acceptable price according to their criteria. Although they may not make the final decision per se, they can be quite influential on the decision maker.

In addition, decisions can be influenced by other advisors not directly affected by the decision. Influencers are individuals in whom the decision maker places trust. These may be a trusted peer at another organization, a spouse or other family member, or other advisor. These individuals do not appear on the organizational chart and may be hard to identify. However, their influence in the decision-making process is nonetheless real. Another set of parties that influence the buying behavior of organizations are sponsors and anti-sponsors of the firm attempting to sell the product or service. Sponsors are those who have dealt with the selling organization before or have successfully used this particular product or service before. They demonstrate brand loyalty and encourage the decision maker to purchase the product not necessarily on its comparative merits, but because they are familiar with it or with the company that provides it. Anti-sponsors are sponsors for another company or product with which they are familiar. In the same way, they will attempt to influence the decision maker based not on comparative merits, but on past experience.

All these parties are important in the decision-making process for organizational buyers. The savvy seller understands these levels of organizational buyer behavior and takes them into account when developing an effective marketing strategy.

Terms & Concepts

Brand Loyalty: The reluctance of a buyer to switch to another brand of product or service because s/he is familiar and comfortable with the brand s/he is currently using or has used in the past.

Buyer Behavior: The complex processes by which consumers choose, acquire, use, and dispose of goods and services in order to fulfill their needs and desires.

Buying Situation: Factors influencing buying behavior that cannot be predicted from a knowledge of either the buyer or the situation alone.

Consumer: A person or organization that acquires goods or services for direct use rather than for resale or use in a manufacturing process.

Hierarchy of Needs: A theory of motivation developed by Abraham Maslow. According to Maslow, there are five levels of need: physiological, safety, belongingness, esteem, and self-actualization. The theory posits that people's behavior is motivated by where they are in the hierarchy. People can move up and down the hierarchy and can also experience needs from several levels at once.

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Motivation: An internal process that gives direction to, energizes, and sustains an organism's behavior. Motivation can be internal (e.g., I am hungry so I eat lunch) or external (e.g., the advertisement for the ice cream cone is attractive so I buy one).

Need: A condition in which an organism experiences the deprivation of something necessary for physiological or psychological fulfillment.

Self-Actualization: The need to live up to one's full and unique potential. Associated with self-actualization are such concepts as wholeness, perfection, or completion; a divestiture of "things" in preference to simplicity, aliveness, goodness, and beauty; and a search for meaning in life. In Maslow's hierarchy of needs, this is the ultimate level of motivator for behavior.

Bibliography

Arndt, J. (1968). Insights into consumer behavior. Boston: Allyn and Bacon.

Banyte, J., Rutelione, A., & Kazakeviciute, A. (2012). Relationship between industry and capital determinants of compulsive buyers’ behaviour: the case of retail clothing market in Lithuania. International Journal of Management Cases, 14(1), 359–373. Retrieved November 20, 2013 from EBSCO online database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=89546205

Horton, R. L. (1984). Buyer behavior: A decision-making approach. Columbus, OH: Charles E. Merrill Publishing Company.

Kothandaraman, P., Agnihotri, R. (2012). Purchase professionals’ cynicism about cooperating with suppliers: does it impact top management efforts to induce relational behaviors in buyer-supplier relationships? Marketing Management Journal, 22(2), 1–18. Retrieved November 20, 2013 from EBSCO online database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=87023184

Larson, J. S., & Billetera, D. M. (2013). Consumer behavior in “equilibrium”: how experiencing physical balance increases compromise choice. Journal of Marketing Research, 50(4), 535–547. Retrieved November 20, 2013 from EBSCO online database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=90046033

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Newell, S. J., Belonax, J. J., McCardle, M. W., & Plank, R. E. (2011). The effect of personal relationship and consultative task behaviors on buyer perceptions of salesperson trust, expertise, and loyalty. Journal of Marketing Theory and Practice, 19(3), 307–316. Retrieved November 20, 2013 from EBSCO online database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=61988855

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Tasso, K. (2003). Adopting the buyer's point of view: An introduction to buyer behaviour and relevant psychology. In Tasso, K. Dynamic Practice Development: Selling Skills and Techniques for the Professions. Retrieved May 1, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=22366820&site=bsi-live

Suggested Reading

Arndt, J. (1968). Insights into consumer behavior. Boston: Allyn and Bacon.

Baca-Motes, K., Brown, A., Gneezy, A., Keena, E. A., & Nelson, L. D. (2013). Commitment and behavior change: evidence from the field. Journal of Consumer Research, 39(5), 1070–1084. Retrieved November 20, 2013 from EBSCO online database Business Source Premier. http://search.ebscohost.com/login.aspx?direct=true&db=buh&AN=85132937

O'Shaughnessy, J. (1992). Explaining buyer behavior: Central concepts and philosophy of science issues. New York: Oxford University Press.

Nunes, P. F. (2003). The customer has escaped. Harvard Business Review, 81 (11), 96-105. Retrieved May 1, 2007, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=11187645&site=bsi-live

Semenik, R. J. (2002). Promotion and integrated marketing communications. Cincinnati, OH: South-Western/ Thomson Learning.

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Essay by Ruth A. Wienclaw, PhD

Dr. Wienclaw holds a doctorate in industrial/organizational psychology with a specialization in organization development from the University of Memphis. She is the owner of a small business that works with organizations in both the public and private sectors, consulting on matters of strategic planning, training, and human/systems integration.

Source Citation

Source Citation   (MLA 8th Edition)
Wienclaw, Ruth A. "Buyer Behavior." Financial & Organizational Behavior, Salem Press, 2014, pp. 39-44. Business Reference Guide. Gale Ebooks, https%3A%2F%2Flink.gale.com%2Fapps%2Fdoc%2FCX7011600012%2FGVRL%3Fu%3Dmnarasmuss%26sid%3DGVRL%26xid%3Ddf3cc800. Accessed 23 Sept. 2019.

Gale Document Number: GALE|CX7011600012